U.S. stocks continued to set new record highs with each passing day. Today, they were buoyed by a hint from the Bank of England that it could launch yet another round of monetary stimulation in August. While the BOE rate-setting committee surprised investors when it voted today to maintain its benchmark lending rate at 0.5 percent, the BOE also stated that most committee members expect to loosen policy next month.
Investors are concerned about the economic future of the U.K. after its citizens voted to leave the E.U. last month, so the BOE’s promise of accommodative monetary policy helps to calms some nerves. Read more about Interest Rates Plumb Lows, Income Stocks Still Attractive 07-14-16
Markets continued to take investors on a roller-coaster ride in the last week, as investors found their bearings in the wake of the startling result of the Brexit vote in Great Britain. Apart from that vote, however, investors remain somewhat cautious about stocks, given the apparent fragility of the U.S. economy.
While the U.S. has created more than 14 million private sector jobs since 2010, making the current economic expansion one of the longest in modern U.S. history, as noted in the minutes of the June Federal Open Market Committee meeting, even policymakers remain uncertain about future economic growth, and disagree on what to do about the most basic tasks before them.
The economy may have “made further progress,” as Janet Yellen so delicately phrased it, but too many Americans spend too much on housing, according a study from Harvard University, well over the third of their income traditionally budgeted for a roof over one’s head. Read more about As Markets Find their Footing, Some Good News 07-07-16
Global jitters set in a week ago after British voters turned out in numbers not seen since 1992 to vote to leaving the European Union. Markets took a dive on Friday and fell again on Monday, but they’ve since rebounded to once again put U.S. stock indexes into positive territory for the year. Read more about Global Jitters Abate 06-30-16
Today is the day—Britain’s referendum on Brexit. By today’s end, we will likely know whether or not the U.K. will stay in the Euro Union—and whether the EU structure remains solid.
The markets take the issue seriously. Stocks rallied Monday (with Treasuries falling sharply); investor concern about Brexit waned as the probability of the “for” vote winning declined. The decline of last week and the rally early this week both clearly indicate what the market would prefer. Read more about Should They Stay or Should They Go? 06-23-16
Flight to safety, caused by growth worries and the uncertainty surrounding the upcoming “Brexit” referendum, has been very pronounced recently, and even the dovish Fed statement couldn’t change the market mood. Government bonds, a traditional safety haven, climbed, with yields plummeting. At yesterday’s close, the benchmark 10-year T-note yield stood at only 1.6 percent, the lowest this month and, indeed, this year. Today, as bonds continued to climb, yields declined further, and the 10-year registered the lowest yield since 2012. The stock market, on the other hand, managed to close higher for the day.
Yields on many other government securities also stood at or near record lows, while some, such as the yield on Germany’s 10-year bond, went negative for the first time ever. Read more about The Fed Battles Economic Headwinds 06-16-16